FLUENT Completes Acquisition of RIV Capital, Adding New York Retail, Wholesale and Cultivation Operations to its Multi-State Footprint
- Accelerates FLUENT’s entry into one of the largest and fastest growing cannabis markets in the world
- Enables FLUENT banner to expand its retail door count to 42, add on its first wholesale division as well as continue to expand its house of brands
- One of the largest U.S. cannabis transactions of 2024, further bolstering FLUENT’s balance sheet with approximately US $33 million1,2 in cash just weeks after securing industry attractive refinancing that positions the Company to consider additional M&A and growth opportunities
- Acquires RIV Capital’s assets and cash balance in a debt-free, all stock transaction: The Hawthorne Collective completes exchange of its existing Convertible Notes in RIV Capital for a new class of non-voting Exchangeable Shares of Cansortium, eliminating US$160 million3 of debt
- Conference Call to be Held Today, December 19, 2024, at 4:00 p.m. (Eastern Time)
TAMPA, Fla., Dec. 19, 2024 (GLOBE NEWSWIRE) — Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) (“FLUENT” or the “Company”), a vertically-integrated, multi-state cannabis company operating under the FLUENT™ brand, and RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) (“RIV Capital”), a vertically integrated cannabis company operating the Etain™ brand in New York, are pleased to announce the completion of the previously announced arrangement with RIV Capital (the “Transaction”), whereby FLUENT acquired all of the issued and outstanding Class A common shares (the “RIV Capital Shares”) of RIV Capital in exchange for FLUENT Shares (as defined below) pursuant to the terms of an arrangement agreement dated May 30, 2024 (as amended, the “Arrangement Agreement”).
Under the terms of the Arrangement Agreement, RIV Capital shareholders (the “RIV Capital Shareholders”) received 1.245 of a common share of FLUENT (the “FLUENT Shares”) in exchange for each RIV Capital Share held. As a result, shareholders of FLUENT (the “FLUENT Shareholders”) hold approximately 51.25% of the combined business of FLUENT and RIV Capital (the “Combined Company”) and the RIV Capital Shareholders and The Hawthorne Collective, Inc. (“The Hawthorne Collective”), together, hold approximately 48.75% of the Combined Company, each on a fully diluted basis. The Combined Company will continue to operate under the FLUENT name and the FLUENT Shares will continue to trade on the Canadian Securities Exchange (the “CSE”) under the symbol “TIUM.U” and on the OTCQB Venture Market under the symbol “CNTMF”.
Under the terms of the Arrangement Agreement, Robert Beasley has been named Chief Executive Officer of the Combined Company. The RIV Shares are expected to be delisted from the CSE at market close on December 19, 2024. The Company will cause RIV Capital to apply to the relevant Canadian securities regulatory authorities to cease to be a reporting issuer under applicable Canadian securities laws.
Management Commentary
“I am thrilled to complete this transaction, and I would like to thank our combined teams for all of their hard work over the past few months and our shareholders for their strong support,” said Robert Beasley, Chief Executive Officer of FLUENT. “Together, we have created one of the most well-positioned cannabis operators in the industry, with a strategic footprint in four key growth markets and a strong balance sheet which will allow us to act on accretive growth opportunities. With integration activities well underway, our teams have continued to uncover synergies that, combined with our history of operational excellence, will enable us to build an efficient, profitable organization.”
With New York legal retail sales on pace to exceed $1 Billion by year end4, our recent successful launch of MOODS in New York underscores the immense potential of the Combined Company, as we have introduced FLUENT’s brands to scale the wholesale operations and gain additional shelf space in dispensaries across the state. With our proven retail and cultivation expertise, we will continue to optimize and build upon the strong foundation we have built in the attractive markets where we operate.
Robert Beasley, Chief Executive Officer
Looking ahead, we remain focused on sustainable, long-term growth and will continue to drive efficiencies across all areas of the business to achieve our profitability and cash generation goals for our shareholders.
“This is a transformational deal for RIV Capital and represents the culmination of substantial work for both FLUENT and RIV Capital,” said David Vautrin, former Chief Revenue Officer and Interim Chief Executive Officer of RIV Capital and, upon closing, Chief Commercial Officer of FLUENT. “As evidenced by past performance, we believe FLUENT is one of the most fundamentally sound and now one of the most well-positioned multi-state operators in the United States. I am looking forward to fully unlocking the potential of this combined team to drive value for our shareholders.”
Hawthorne Notes Exchange
Further to the Company’s press release dated May 30, 2024, the Company and The Hawthorne Collective entered into an exchange and protection agreement on December 18, 2024 (the “Exchange and Protection Agreement”), pursuant to which The Hawthorne Collective exchanged its existing unsecured convertible notes in the aggregate principal amount of US$160 million, including any accrued and unpaid interest payable by RIV Capital, for 153,069,395 non-voting exchangeable shares (the “Exchangeable Shares”) in the capital of the Company (the “Hawthorne Notes Exchange”). In addition, the Exchange and Protection Agreement contains certain provisions that prohibit The Hawthorne Collective from converting its Exchangeable Shares into FLUENT Shares where such conversion would result in The Hawthorne Collective, together with any person or company acting jointly or in concert with The Hawthorne Collective, having an aggregate beneficial ownership of, or control or direction over, directly or indirectly, over 19.99% of the Company’s issued and outstanding voting securities immediately after giving effect to such conversion, unless and until the Company has received the necessary shareholder approval in accordance with all applicable policies of the CSE. For more information on the Exchange and Protection Agreement and the Hawthorne Notes Exchange, see the Company’s news release dated May 30, 2024 and the management information circular of the Company dated July 12, 2024 filed under the Company’s profile on SEDAR+ at www.sedarplus.ca.
The foregoing description of the Exchange and Protection Agreement is not complete and is qualified in its entirety by reference to the full text of the Exchange and Protection Agreement, a copy of which will be filed on the Company’s profile on SEDAR+ at www.sedarplus.ca.
Investor Rights Agreements
In connection with the Hawthorne Notes Exchange, the Company and The Hawthorne Collective also entered into an investor rights agreement (the “Hawthorne Investor Rights Agreement”), providing for, among other things, the right of The Hawthorne Collective to nominate up to two members to the board of directors of the Company (the “FLUENT Board”), so long as The Hawthorne Collective and its affiliates maintain certain specified beneficial ownership requirements as set forth in the Hawthorne Investor Rights Agreement. In addition, for so long as the beneficial ownership requirement is satisfied, The Hawthorne Collective is entitled to certain participation rights in order to maintain its pro rata equity ownership position in the Company in connection with any offering of FLUENT Shares, or securities exercisable, convertible or exchangeable for FLUENT Shares, by the Company, subject to certain exceptions, and certain other customary rights, including demand registration rights, piggyback rights and information rights.
In addition, further to the Company’s press release dated November 26, 2024, the Company and certain of its affiliates and William Smith, a director and the Executive Chair of the Company, and certain companies controlled by Mr. Smith (together with Mr. Smith, collectively, the “Smith Group”), have entered into an investor rights agreement (the “Smith Investor Rights Agreement”) in connection with that certain amended and restated termination agreement dated November 26, 2024, providing for, among other things, the Smith Group’s continued right to nominate two members of the FLUENT Board, so long as the Smith Group and its affiliates maintain certain specified beneficial ownership requirements as set forth in the Smith Investor Rights Agreement. The Smith Investor Rights Agreement contains substantially similar terms as the Hawthorne Investor Rights Agreement, including certain participating and piggyback registration rights.
The foregoing descriptions of the Hawthorne Investor Rights Agreement and the Smith Investor Rights Agreement are not complete and are qualified in their entirety by reference to the full texts of the Hawthorne Investor Rights Agreement and the Smith Investor Rights Agreement, copies of which will be filed on the Company’s profile on SEDAR+ at www.sedarplus.ca.
Additional Information for RIV Capital Shareholders
Pursuant to the Transaction, former RIV Capital Shareholders are entitled to receive 1.245 FLUENT Shares for each RIV Capital Share held. In order to receive FLUENT Shares in exchange for RIV Capital Shares, former registered RIV Capital Shareholders must complete, sign, date and return (together with their certificate or DRS statement representing their RIV Capital Shares) the letter of transmittal that was mailed to them prior to closing of the Transaction. The letter of transmittal has been filed by RIV Capital under RIV Capital’s profile on SEDAR+ at www.sedarplus.ca and on RIV Capital’s website at www.rivcapital.com. The letter of transmittal is also available by contacting Odyssey Trust Company, the depositary for the Transaction, by telephone at (587) 885-0960 or by email at: corp.actions@odysseytrust.com.
Financial and Legal Advisors
ATB Securities Inc. acted as financial advisor to FLUENT and Paradigm Capital Inc. provided an independent fairness opinion to the FLUENT Board. Wildeboer Dellelce LLP and Shumaker, Loop & Kendrick, LLP acted as Canadian and United States legal counsel, respectively, to FLUENT.
Moelis & Company LLC acted as financial advisor to RIV Capital and provided a fairness opinion to the board of directors of RIV Capital (the “RIV Capital Board”). INFOR Financial Inc. provided an independent fairness opinion to the RIV Capital Board. Cassels Brock & Blackwell LLP and Goodwin Procter LLP acted as Canadian and United States legal counsel, respectively, to RIV Capital.
Conference Call
FLUENT will host a conference call and live audio webcast today at 4:00 p.m. Eastern time to discuss the Transaction as well as its financial and operating results for the third quarter ended September 30, 2024.
Date: Thursday, December 19, 2024
Time: 4:00 p.m. Eastern time
Toll-free dial-in number: (844) 763-8274
International dial-in number: (412) 717-9224
Link: FLUENT Conference Call
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
The conference call will also be available for replay via the News & Events section of FLUENT investor relations website at https://investors.getFLUENT.com/.
About Cansortium Inc.
FLUENT is a vertically-integrated cannabis company with licenses and operations in Florida, New York, Pennsylvania and Texas. The Company operates under the FLUENT™ brand and is dedicated to being one of the highest quality cannabis companies for the communities it serves. This is driven by FLUENT’s unrelenting commitment to operational excellence in cultivation, production, distribution and retail. The Company is headquartered in Tampa, Florida. The FLUENT Shares trade on the CSE under the symbol “TIUM.U” and on the OTCQB Venture Market under the symbol “CNTMF”. For more information about the Company, please visit www.getFLUENT.com.
About RIV Capital
RIV Capital is a firm dedicated to developing a leading multi-state platform with a strong portfolio of cannabis brands focused on key strategic markets in the U.S. Backed by in-house expertise and cannabis domain knowledge, RIV Capital aims to grow its own brands and partner with established U.S. cannabis operators and brands to bring them to new markets and build market share. RIV Capital established the foundational building blocks of its active U.S. strategy with its previously announced acquisition of Etain. Through its strategic relationship with The Hawthorne Collective, a subsidiary of The ScottsMiracle-Gro Company (“ScottsMiracle-Gro”), RIV Capital is The Hawthorne Collective’s preferred vehicle for cannabis-related investments not under the purview of other ScottsMiracle-Gro subsidiaries.
